Ghee units allowed input tax adjustment

ISLAMABAD (January 20 2003) : The Central Board of Revenue (CBR) has allowed the manufacturers of ghee/cooking oil to claim input tax adjustment on the total amount of general sales tax (GST) paid at import stage.

The auditors and Pakistan Vanaspati Manufacturer's Association (PVMA) were divided over the percentage of input adjustment to be paid at the import stage.

Ghee/cooking oil manufacturers said that 99 percent of the total imported quantity of edible oil reaches the manufacturing units whereas auditors contested that input adjustment could only be allowed on the actual quantity reaching such factories.

However, CBR on Sunday notified to all collectors of sales tax to allow input adjustment of the amount of sales tax paid at import stage.

PVMA stated that quantity of edible oil imported and subsequently cleared from port areas is less by up to 1 percent because of ship shortages and it is this short quantity which actually reaches their manufacturing units, whereas audit authorities raised objection on the input adjustment being claimed by the vegetable ghee/cooking oil units on total quantity of edible oil actually indented and imported.

Audit insisted that input adjustment should be claimed only on the quantity which actually reaches the ghee manufacturing units.

As a result of this stance, PVMA had feared that there was strong possibility that unjustified recovery/contravention cases would be made against the manufacturers of vegetable ghee/cooking oil units.

The CBR has issued instructions to all collectors of sales tax to allow input adjustment of the amount of sales tax paid at import stage and accept the quantity of imported oil as per short shipment/short landing certificate issued by the custom authorities.

The certificate would also be got verified from the issuing collectorate on monthly basis.

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